DESCRIPTION

Emblematic building located in the most commercial point of Barcelona’s Plaza Cataluña, specifically at the intersection with Las Ramblas.

The building, acquired in 2013, has a total gross leasable area of 7,100 sqm distributed over 8 floors (first floor + 5 floors above ground and 2 basement floors).

THE INTERVENTION: VALUE ADD

Being the first asset acquired by IBA Capital, it represents one of the most significant transactions in the Spanish real estate sector in recent decades. There are several reasons for this:

Firstly, the size of the investment and the asset itself, a monumental building with an elegant and classic architectural style, with a notable historical character for the city of Barcelona and strategically located in the commercial heart of the city.

Secondly, it was one of the first major real estate transactions of the time (Spain was still struggling to overcome the crisis) and, with the help of IBA, the beginning of a change of trend in the real estate investment market.

Finally, this was an off-market transaction on one of the first properties of this type to be sold by the large El Corte Inglés chain throughout its history, under the Sale & Leaseback modality, with El Corte Inglés remaining the sole occupant and lessee of the property.

After several years of leasing the asset, in 2018 an agreement was reached with El Corte Inglés, whereby the latter terminated its lease and left the building.

During this period and once again for the sake of optimizing deadlines, IBA initiated a three-pronged strategy focused on three fundamental lines: start of the asset’s refurbishment to adapt it to the best market standards and turn it into a modern and efficient commercial property; search for a tenant of the highest level, in line with the property itself; and design of the strategy for the divestment process.

After a competitive process in which the asset was the subject of great interest from some of the most prestigious international brands, an agreement was reached with the well-known Primark chain, to whom the building was handed over in July 2019 and, after its own implementation and refurbishment works and despite the pandemic generated by COVID 19, it opened its flagship store in Barcelona on June 30, 2020.

DIVESTMENT

In parallel to the refurbishment and leasing process, in 2019 IBA structured and created an investment vehicle to which the asset would be contributed, in order to subsequently provide entry to a group of investors. Thus, an agreement was reached with one of the leading financial institutions in Spain, which offered entry into the capital of the vehicle to a select group of institutional and private investors, clients of the Private Banking area of the entity, thus providing them with this exceptional investment opportunity, based on a prime-core real estate product, of the highest level in its sector.

In this investment product structured and custom-designed by IBA, a successful result and stable long-term profitability is being obtained, with IBA remaining as the manager of the vehicle and the property, as well as an investor in it.

This transaction took place in December 2019.

On the other hand, once the sale was formalized, the investment obtained the following results for the seller, SOCIMI managed by IBA, which maximized the results of its investment:

▪ Project life: 6 years.

▪ Net unlevered IRR (post-tax): 13%.

▪ Equity multiple: 1.8x.